AI Market Loses Over $500 Billion as Investor Confidence Wavers

The AI bubble has burst under the pressure of multi-billion expenditure

The global artificial intelligence market has faced its sharpest correction in recent years: investors’ cumulative losses have already exceeded $500 billion. Global technology indices have plummeted. The panic, which began in the Asian semiconductor sector, has spread to US stock exchanges, triggering a massive sell-off of shares in leading chipmakers and AI start-ups.

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Today alone, stock markets in the US, Japan, South Korea, Turkey, China and Taiwan have plummeted by $1.7 trillion, gold and silver have fallen by $1 trillion, and cryptocurrencies have crashed by $140 billion. Investors have lost nearly $3 trillion in a single day.

The epicentre of the crisis was China’s technology sector, where the STAR50 index of high-tech companies has plummeted by more than 40 per cent from its July highs. The collapse of the AI market has rapidly taken on an international dimension. Reuters has published a comprehensive study using the example of the technology rally in Asia.

Massive losses in China: Leaders in robotics and microelectronics (including Unitree, MetaX and Moore Threads) lost between 25 per cent and 50 per cent of their market value. The US Nasdaq Composite index fell by 5–6 per cent, correcting from its all-time highs. Shares in AMD, Intel, Dell Technologies, ASM International and South Korea’s SK Hynix came under heavy pressure from investors.

Why the bubble burst: three main factors

Wall Street analysts identify a range of reasons that led to the deflation of AI expectations:

The return-on-investment crisis: Investors have lost faith in promises of ‘quick profits’ against a backdrop of massive bills for building data centres and purchasing equipment.
Interest rates: High interest rates set by central banks around the world have made borrowed capital too expensive for tech start-ups.
Technology sanctions: Tighter US export controls on the supply of advanced chips to Asia have disrupted supply chains and deprived many companies of key sales markets.

Experts note that the current slump will clean up the market by weeding out unviable start-ups, although the phase of sharp correction in the BigTech sector may drag on for several quarters.

This story was translated with the assistance of artificial intelligence.The translation was also reviewed by the Logos Press editorial team.

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